Familiar to many, The Wire is a gritty and gripping drugs, policing and political drama set in Baltimore, Maryland. But it is perhaps an odd place to start a thought-piece on the case for fiscal devolution in London, England. There are, however, good reasons for doing so.
In the award-winning series, successive mayors grapple with problems of failing schools, industrial decline and the quest for regeneration. How they do this has lessons for the current UK government, which is on the cusp of announcing major reform to the machinery of Whitehall and town halls.
Many of the challenges to America’s cities will be familiar to local and city region leaders over here. Regeneration, affordable housing and better public services are all watchwords for towns and cities here. Mercifully, our social and economic ills are often less extreme than in the US. The British system of collecting and redistributing taxes centrally helps soften the blow when one area of the country is experiencing decline. But taken too far, it blunts growth incentives and the creation of wealth in those places that are prospering.
On the other side of the Atlantic the opposite is true. Mayors have far greater control over their own cities’ financial destiny. Business and residential taxes are largely locally set and retained. Mayors enjoy powerful incentives to grow their tax base. In some cases, they may even choose to cut them to attract more homes and jobs. In others, a serious decline in revenues can lead to long-term decline.
In Britain, this powerful fiscal mechanism has been diluted and effectively taken away by successive governments. This has resulted in a profound disconnect between building and development and the local tax base. That has hobbled our local leaders when they try and make the case for growth to their voters.
The current government’s big idea – Rewiring the State – will apparently mark a sea- change in devolution policy. Done well, the prize will be worth having. Enhanced fiscal powers for London local government and indeed our other great cities are a crucial step towards empowering them to be more open to development and growth. Housing, transport, skills and public services would also benefit from being organised and paid for a bit more locally and regionally. They would enjoy a level of granularity and responsiveness that central government cannot match. A model that encourages a cycle of growth, through improved local amenities, will help contribute to thriving local economies that in turn boost tax revenues. This would boost the provision of more space for jobs and homes.
As Mayor Clarence Royce, pointing at a building site in Season 4 of The Wire says, “…it’s developments like this one, planned residential towers with waterside retail space and restaurants that grow Baltimore’s tax base and help rebuild our city.”
We can but hope that when it comes to rewiring our state, the Prime Minister’s advisors are all avid watchers.